The " loss leader " strategy !

When the first supermarkets appeared in this country many decades ago they employed a sales tactic that became known as the " loss leader strategy " !

It was delightfully simple. Each week they advertised several items for sale below cost ! They actually lost money on every one of these items sold - and that had them laughing all the way to the bank.

People poured into their stores to take advantage of this " bargain ", and quickly restored the lost profit from the other purchases they made, in many cases with the odd cent tacked on to compensate for the loss.

Today that strategy is evident in linking the sale of groceries with the price of petrol, except it has more sinister overtones !

The two big supermarket chains now have the power to decimate those competitors competing in the sale of petrol and groceries. If they take a loss on the sale of petrol this is subsidized by the sale of groceries - and when they switch and restore the price of petrol but discount groceries - they deny sales to their grocery competitors.

If they systematically reduce the competition in either field, eventually they end up with a duo-monopoly in both trades - and that would be a very dangerous situation for this great country to find itself confronted with.

The job of a government is to protect the citizens from rapacious trade practices that reduce competition - and government action is now urgently needed.

Petrol is a critical item of national importance. The economy of the country can not function without it. We are a car dependent society and should ever a commercial entity gain total control the mobility of the nation would be at risk.

The government needs to ensure this does not happen by declaring petrol a controlled substance - and outlawing it's price being determined by the purchase of other products.

By all means allow Coles and Woolworths to sell petrol, but on the proviso that they have to compete equally with others marketing the product - and without the inducement of a grocery docket to achieve a discount.

As a " controlled substance " and in the national interest, the price of petrol to all retail outlets should not vary to allow market forces to determine individual discounting.

In commerce generally, the ability to bulk buy in quantity generally results in a better buying price, but petrol should be removed from that principle because it is in the national interest to have a wide range of individual outlets providing the product to the public - and that can only be maintained if those outlets are not subjected to unfair competition by a predatory pricer.

Control of petrol will not restore the grocery market to a level playing field, but at least it will remove an item that is the nation's lifeblood from being hijacked and the ordinary citizen held to ransom in the never ending quest for more profit.

Government action is urgently needed - now !